There are a lot of risks that affect agricultural production and the income of small holder farmers. Although many of the risks cannot be avoided, it can be managed and transferred.
Agricultural risk management relies on a combination of technical and financial tools which can be used to deal with the multiple sources of agricultural risk. Small holder farmers may transfer all or part of the risks to a third party through an insurance contract.
Agri insurance has grown in Africa recently thanks to the rise in popularity of mobile micro policies. Microinsurance is important for small holder farmers as it can provide a safety net when an unexpected event occurs.
Agricultural Insurance can include the following covers:
Multi-Peril Crop Insurance – This cover can protect against the risk of crop failure due to drought, storm, pests and diseases.
Weather Index Cover – Weather index cover utilises technology and weather data to monitor rainfall. Farmers can opt to cover certain growing phases, the whole season or a particular severity of loss.
Livestock Cover – Livestock cover is an indemnity product which insures against the death of specified animals from accidents and certain diseases.
At Rural Inclusion, we work with small holder farmers to teach about the benefits of risk transfer and insurance, so that they can be prepared for an event that negatively impacts their production ability and income, and work with partner financial institutions to design agricultural products that reach uninsured and underserved regions.